ACOs That Lose Money

A few years back I highlighted how ACOs were failing but when does that stop bureaucracy?  At that time (2015) they had tons of excuses.  Here is one I highlighted back then:

  • Their experiences reflect that ACOs are still a new structure, and building a new payment and care model as complex as an ACO is not easy to roll out.

So, how is it going now?

The Medicare Shared Savings Program (MSSP) increased federal spending by $384 million between 2013 and 2016, according to an analysis from consulting firm Avalere Health — despite a 2010 estimate from the Congressional Budget Office that the program would save $1.7 billion over that time period.

At least they have no more excuses, right?  I’m kidding. They are actually still using the same ones:

“These results suggest that CBO’s initial projections may not have taken into account the time it takes for ACOs to gain experience with the program and to start to produce consistent savings,” Avalere noted.

It just goes to show you that when they are dealing with other people’s money, your tax dollars, that bureaucracy knows no bounds and can continue to bulls%t like nobody’s business.

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Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  5 comments for “ACOs That Lose Money

  1. April 9, 2018 at 2:19 pm

    I don’t have a specific comment about ACO, but I disagree that holding a physician accountable for the cost of the care they provide is unethical. I actually think that the opposite, which is making physicians entirely unaccountable for the costs of their decisions, is a large part of the huge increase in the cost of healthcare over time. By entirely insulating physicians (and largely patients) from their choices, we have created every incentive to maximize the cost of healthcare. After all, if we experience no cost for a choice yet gain any sliver of benefit, one would always choose that path. This was discussed in depth in the book “Free: The Future of a Radical Price”, which discusses typical market behavior when a person is presented with a item that costs nothing to them, yet provides a benefit. That market behavior is for that resource to be wasted.

    In my own experience operating in an outpatient surgery center where I personally benefit from saving money in the center, I make choices that dramatically decrease costs. I also find that I am able to provide extremely high quality surgery, despite these choices. I need only to look to my colleagues in Europe who are master surgeons yet practice in a socialized system that does not afford them unlimited access to expensive disposable equipment. Their quality is unmatched, yet they spend a fraction of what we do on operative consumables.

    I’m not sure about ACOs per se, but I’m all for both physicians and patients having some skin in the game as to the cost of healthcare.

    • Steve O'
      April 10, 2018 at 8:39 am

      I do not agree. A stable of healthy insured is a gold mine. The risk of additional treatments being more expensive than others, if they are both effective, is minuscule. The profit is in the restoration and maintenance of health.

  2. Perry
    April 8, 2018 at 12:29 pm

    ACOs are conflict of interest and unethical. You don’t make money by saving money for the system, by scrimping on patient care. I agree we should use tests wisely and help our patients save money, but don’t avoid care to get your bonus.

    • RSW
      April 9, 2018 at 8:59 am

      The unethical part – getting paid to withhold care – is staggering, but no one talks about it.

  3. Steve O'
    April 8, 2018 at 10:42 am

    RISK is an essential cost of every enterprise. Risk is either extrinsic, like farming is, betting that the weather will stay within a certain aggregate range that will allow your crops to grow; or intrinsic, the risk that you have made bad plans.
    When someone or something changes the rules arbitrarily, it’s like the gods constantly sending you bad weather. You can’t plan for it. Similarly, the risk of your planning not fitting what’s coming is high, if nobody knows what’s coming.
    The CMS tinkerers, and the corporate planners and business hotshots have sunk their teeth into the cashflow of American healthcare, and they’re eager to get more.
    They’re introducing unpredictable risk, which equates to unpredictable costs. They are guaranteeing the demise of small-practice medicine, and the rise of industrial corporate Taylorism in medicine. They see the future of medicine, and it is not different from Amazon, which have brought consumerism to the factory floor. The price of risk of stuff like ACOS can be underwritten by large groups; the small folks get overwhelmed. The injustice of bankrupting the individual practices by increased risk is waved a way as a “cost of doing business,” “capitalism in action” (which it isn’t,) and “the wave of the future.”
    ACOS costs practitioners’ money, ho-hum. We, the masters of CMS, make the changes and the peons take the risk. We’ve talked it over with our cronies in United Health and Wal-Mart, and they will buy into it. The little guy is the loser. So sad.

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